Programmatic TV represents a revolutionary way of automating the purchase of ad slots. It’s a data-driven, technology-driven approach to acquiring and delivering ads within television content. This encompasses:
Programmatic TV diverges from the industry norm, where advertisers traditionally rely on show ratings for ad placement. Instead, it employs audience data for highly targeted advertising, reaching specific consumer segments, like iPhone-owning men with a $40,000 income.
For marketers, the focus shifts from where the ad appears (e.g., X Games or The X Factor) to ensuring the ideal audience is engaged.
Programmatic advertising refers to the use of software for purchasing digital ads, streamlining a process that traditionally involved requests for quotes, tenders, proposals, and negotiations. Algorithmic software is the driving force behind programmatic ad buying, facilitating the buying and selling of online ad space.
This model bridges the gap between publishers (those with ad inventory) and advertisers (individuals or companies seeking ad space). It revolutionizes TV service scaling, ad buying, and delivery, enabling advertisers to swiftly find their target audience and deliver personalized ads.
Advertisers and marketers can automate in-depth consumer analysis and tailor ad content, creating a more effective advertising model. Meanwhile, publishers and distributors can deliver TV programs aligned with viewer preferences, such as gender and age.
There are four primary programmatic ad buying models, each with distinct approaches and ideal use cases:
Real-time Bidding: Ad spots are open for public bidding in real-time over the internet. The highest bidder secures the spot but pays only slightly more than the second-highest bidder.
Preferred Deals: Advertisers choose ad spots before real-time bidding auctions or private marketplaces, providing a preview of available ad space. A fixed price, known as spot buying, is agreed upon before the spot is claimed.
Private Marketplace: An invitation-only marketplace where publishers offer premium ad spots to select advertisers. This approach is commonly used by high-reach publications and websites, ensuring transparency in ad placement.
Programmatic Guaranteed: Advertisers and publishers negotiate ad spot terms directly, bypassing the bidding process. Advertisers can specify pricing, audience, and ad frequency, offering maximum control but at a higher cost.
The global programmatic ad spending market is poised to grow significantly, with an estimated increase of about $314 billion during 2022-2026, averaging around 26% per year. This growth is fueled by the distinctive advantages offered by programmatic TV in comparison to traditional media buying:
1. Enhanced Reach: Programmatic TV facilitates connections with local broadcasts, especially in smaller markets, enabling access to a broader audience. Publishers can attract national brands, commanding higher prices for ad inventory.
2. Richer Data: Programmatic TV harnesses diverse data sources, enabling the delivery of more personalized and relevant ads. Multiple data sets, including publicly available social data and set-top box viewership, collaborate to define brand behavior and optimize ad campaign performance.
3. Reduced Errors: Automation eliminates errors that often plague manual, complex processes in media buying. Advertisers and ad spot sellers benefit from streamlined workflows, with automated availability requests, proposals, and orders. This empowers advertisers to reserve ad spots across multiple local stations through a single dashboard while modernizing and streamlining inventory management.